New figures show HMRC’s “customer compliance” efforts are yielding substantial sums.
In early August, HMRC issued its annual report and accounts for 2018/19. While not everyone’s choice of holiday reading, it did contain some eye-opening information about the “compliance yield” – how much HMRC raised from its work in countering tax avoidance schemes, tax evasion and plain fraud.
HMRC puts the figure at £34.1bn out of total revenue raised in 2018/19 of £627.9bn. Of that £34.1bn, £13bn was hard cash collected as a result of investigations, a 27% increase on investigations from the previous year. The sharp rise was partly due to individuals settling with HMRC ahead of April’s introduction of the controversial Loan Charge, targeting disguised remuneration schemes.
UHY Hacker Young, the accountants, suspect that HMRC’s improved compliance cashflow could also be due to last year’s offshore tax campaign. This established a ‘requirement to notify’ HMRC of undeclared income or gains by September 2018, or face penalties of up to 200% of the amount due, plus interest.
There was probably also a boost from the implementation of the OECD’s Common Reporting Standard, generating automatic exchange of information between national tax authorities. This may have become apparent from the appearance of questions about tax residence in many financial documents or from existing institutions with which you hold investments.
In its accounts, HMRC highlights that it places about 500,000 ‘Wealthy Individuals’ into their own separate ‘customer group’. To join this select group requires an income of over £150,000 or assets above £1 million. Those lucky members are the focus of special teams with “an in-depth understanding of the finances, behaviours and compliance risks of wealthy individuals” and “strong data-led approaches to identify who is not paying the right tax”.
The unspoken message from HMRC is that sidestepping tax, whether by contrived avoidance schemes, evasion or fraud, is becoming ever more unlikely to succeed. On the other hand, there remain plenty of straightforward planning opportunities with which we can help you.
To discuss your tax plannign strategies with one of our Chartered Financial Planners drop us a line on 0114 266 4432 or info@smhca.co.uk
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